June 21 (Bloomberg) -- Oracle Corp., the largest maker of
database software, fell to a seven-month low after sales missed
estimates for a second straight quarter as customers shifted
spending to competitors’ Web-based business tools.

The shares slumped 9.3 percent. Fiscal fourth-quarter sales
were $11 billion, Oracle said yesterday, missing analysts’
average estimate of $11.1 billion, according to data compiled by
Bloomberg. While profit excluding some items of 87 cents matched
estimates, Oracle’s profit forecast for the current period
trailed some projections. Oracle also doubled its quarterly
dividend, added $12 billion in buybacks and applied to list on
the New York Stock Exchange.

“There’s no growth at Oracle,” said Walravens, who rates
Oracle market perform, the equivalent of neutral. “The world is
moving to software as a service and at some point all these big
vendors need to get on board. But the bigger you are the harder
it is,” he said. “It has been a period of slower growth and
investors are starting to focus on that.”

Software Sales

Shares of Redwood City, California-based Oracle dropped to
$30.14 at the close in New York, the lowest since Nov. 16. They
have declined 9.6 percent this year, compared with a 12 percent
gain for the Standard & Poor’s 500 Index.

German software rival SAP AG, which is also trying to cope
with cloud-service demand, fell 2.7 percent in Frankfurt to the
lowest price since October.

The shift in corporate-computing habits is making it harder
for Oracle to compete with cloud providers such as
Salesforce.com Inc. and Workday Inc. Oracle’s sales of new
software licenses and cloud subscriptions, a closely watched
indicator of future revenue, increased 1 percent to $4.03
billion. That was short of Walravens’ $4.22 billion estimate.

Revenue from new licenses and cloud subscriptions in the
current fiscal first quarter will range from unchanged to an 8
percent increase from a year ago, excluding the effect of
currency fluctuations, Safra Catz, Oracle’s chief financial
officer, said in a conference call with analysts yesterday.
Profit excluding some items will be 56 cents to 59 cents a
share, and currency rates will lower earnings by about 2 cents,
she said. Analysts were predicting 56 cents to 62 cents, and an
average of 58 cents.

Cloud Shift

Oracle has been struggling to catch up to online software
rivals, even as it acquires companies such as Taleo Corp.,
RightNow Technologies Inc. and Eloqua Inc., according to Josh
Olson, an analyst at Edward Jones & Co. in Des Peres, Missouri.

“They were caught flat-footed by the interest in the
software-as-a-service model,” Olson, who has a buy rating on
the stock, said in an interview. “Seasonally, the fourth
quarter is their biggest and most important software quarter and
we have a miss here on software,” he said. “It appears the
missed sales execution continues.”

Net income rose to $3.81 billion, or 80 cents a share, from
$3.45 billion, or 69 cents, a year earlier.

Database Customers

Mark Hurd, Oracle’s co-president, told analysts that
economic slowdowns in China and Australia hampered the quarter’s
results, while the company did “pretty darned well in Europe,”
which accounted for 17 percent of sales.

Oracle will announce next week that companies including
Salesforce, Netsuite Inc. and Microsoft Corp. are “committing”
to use Oracle’s latest 12c database, designed for companies
running cloud-computing software, Ellison said on the call.
Salesforce and Netsuite already run Oracle’s database to power
their applications, while Microsoft and Oracle have been
longtime rivals in the database market.

Microsoft CEO Steve Ballmer and Satya Nadella, president
for servers and tools, are joining Hurd to share details of a
new partnership at a press conference scheduled for June 24,
according to an invitation from the software company.

“12c is the most important technology we’ve ever developed
for this next generation of cloud,” Ellison said.

The hardware business may be turning a corner too. Ellison
said Oracle’s Exadata computers and other high-end “engineered
systems” now account for more than a third of the company’s
total hardware business. Oracle sold more than 1,200 such
systems in the fourth quarter. Catz said the total hardware
business, including less expensive servers, could grow this
quarter.

‘Hardware Declines’

“We may just have seen the last of annual hardware
declines,” Catz said.

Oracle is also returning more cash to investors. It doubled
the quarterly dividend to 12 cents a share from 6 cents.
Ellison, the company’s biggest investor, didn’t participate in
discussions concerning the dividend, which will be paid on Aug.
2 to stockholders of record as of July 12.

The company has spent more than $50 billion on a string of
about 100 acquisitions since 2005 to bolster its sales, profit
and stock price.

Oracle’s plan to move its listing to the New York Stock
Exchange from the Nasdaq Stock Market makes it the biggest
company ever to jump between the rival exchanges. Oracle’s board
determined that the switch would be in the best interests of its
shareholders, customers and partners, the company said.